Cohn's Strategic Trade Theory Assignment Example | Topics and Well Written Essays - 750 words

Cohn's Strategic Trade Theory - Assignment Example There is a theory that describes this sought of setting called the competitive theory. As for the comparative trade theory, an example that can demonstrate the theory can be; take to countries which are both good at producing two products (Cohn, 171). For both countries, their resources are limited, and this means that they can only produce a limited number of goods. When one country increases the production of one product, the other product’s production is lowered. Each of the individual countries can produce either good, but for trade purposes, one country produces one product more efficiently while the other does the same to another product. This will lead to both trading and mutually benefiting (Comparative Advantage Theory) According to Cohn, there are certain theories that helped Japan become second to the United States. These theories provide an understanding of how Japan became successful. The theories are associated with the comparative advantage. They are; theory of production economies of scale, market power, learning by doing and the theory of externalities. According to Cohn, Japan realized the trade benefits of comparative trading (Gilpin and Jean, 78). Japan and the United States are two countries that are different.